The NYDFS recently completed an audit of records of NY excess line transactions submitted by brokers and found that binders were being issued by brokers who had no binding authority at all or who had not filed binding authority agreements with ELANY. As a result, on February 19, 2019, ELANY issued Bulletin No. 2019-09 clarifying the NYDFS’ interpretation of binder and the proper issuance of binders.
A binder may only be issued for an eligible excess line insurer or its representative by a New York licensed excess line broker with a proper written binding authority or a third party with a legitimate binding authority. Excess line brokers without binding authority should, instead, issue a “confirmation of placement of coverage” (“confirmation”), which serves as a broker’s representation of insurer’s actions without acting on the insurer’s behalf. While binders and confirmations must be initially submitted to ELANY for review and stamping, brokers are still required to submit the subsequent declarations page to ELANY as soon as possible.
The full bulletin may be viewed here: http://www.elany.org/f/2114.
For any questions regarding New York’s excess line broker requirements, or for assistance in any excess line compliance matters, please contact Westmont Associates, Inc.